Furlough fraud occurs when an employer claims for a furloughed employee in breach of the rules on furlough. Furlough fraud can take various forms such as, asking employees to `volunteer’ while they are on furlough, making backdated claims despite the employee working their full time hours, claiming for employees who are no longer employed by the business and furloughing an employee who is still working without telling them. There are key rules to follow with furlough to avoid this including:

• Ensuring employees do not do any work for the employer while they are furloughed.
• The reason for placing employees on the furlough scheme must be directly related to Coronavirus.
• An employee is able to undertake training while on furlough, however this cannot generate a profit for the employer.

Furlough fraud is a criminal offence and comes under the Thefts Act, Fraud Act and the Criminal Finances Act. The scheme has cost the government and tax payers billions of pounds since it was introduced in March 2020 and HMRC will be supported in order to tackle fraudulent furlough claims made. The penalties range depending on the severity of the offence, however there will be prison sentences for those deemed liable for serious cases. Of course, the Coronavirus Job Support Scheme is still relatively new and therefore It remains to be seen how diligently HMRC will investigate businesses. Furthermore, due to the immense pressure businesses have been under throughout the pandemic, the government recognises that innocent and careless mistakes will have been made which is why there is constant new guidance rolled out with the aim to aid employers.